4Front sees first quarter revenue dip, pushes expansion efforts
4Front Ventures Corp. (OTCQX: FFNTF) reported a year-over-year revenue decline in the first quarter of 2024 ending March 31, as it continues investing in cultivation and retail growth initiatives.
4Front posted revenue of $18.8 million for the January-March period, down from $26.3 million in the same last year. The Phoenix-based multi-state operator attributed the dip to seasonal elements impacting its core Illinois and Massachusetts markets.
“In Massachusetts, revenue decreased from $9.3 million in Q4 of 2023 to $8 million, influenced by seasonal trends and lower flower yields and pricing,” the release stated. “In Illinois, revenue slightly dipped from $8.7 million to $8.5 million, due to similar seasonal factors and market price adjustments.”
Despite the revenue drop, 4Front maintained adjusted EBITDA of $2.5 million, consistent with the prior quarter.
Newly-minted CEO Andrew Thut, who took over in January, struck an upbeat tone about 4Front’s position heading into the second half of 2024 as capacity expansions take hold. That includes the ramp up of the company’s new Matteson, Illinois cultivation and production facility.
“The upcoming launch of our new cultivation and production facility in Matteson, Illinois, is expected to greatly enhance our supply capabilities by this summer,” Thut said in a statement. “Alongside the expansion of our retail locations, these developments will drive growth and strengthen our market presence.”
4Front is aiming to quintuple flower supply out of Matteson, with harvests scaling to full capacity by August per the release. That would feed into the company’s branded extract and edible product lines.
The operator highlighted progress at its forthcoming Norridge, Illinois retail location, stating construction is now complete pending final license approval expected soon. Additional executive hires were also announced in cultivation, operations and sales leadership.
On the balance sheet, 4Front said it converted $23 million of senior secured debt into equity during the first quarter, reducing annual interest expense by around $3 million. However, the company still carried $66.1 million in debt obligations at the end of March.
Management touted the company’s positioning to capitalize on broader tailwinds supporting industry growth, including the proposed reclassification of cannabis as a Schedule III controlled substance by federal regulators.
“This change has profound legal and global implications, facilitates extensive medical research, and corrects historical injustices in cannabis-related law enforcement,” Thut said, regarding the Drug Enforcement Administration’s preliminary ruling.
